Sustainable agricultural financing

Agriculture: a vital sector lacking specialised financing

Agriculture is the main economic activity that meets the world population’s demand for food. According to the United Nations, this sector is the world’s main employer. It is currently the source of earnings for 40% of the world’s population, and the main source of revenue and provider of employment for poor households in rural areas.
Despite the important role agriculture plays in feeding the world, 500 million small farming enterprises that supply around 80% of the food consumed in developing countries still lack crucial financing mechanisms that are adapted to their activity.

Formal financial institutions are still considerably limited in providing financial services to households dependent on agriculture, as well as in the agribusiness sector. This leads to a rural financing gap limiting agricultural investment and significantly affecting smallholders and their organizations, as well as small and medium-sized agricultural enterprises. All three constitute the so-called "missing middle" in financial markets, and suffer from very limited access to financing.

As part of its mission, ADA has identified a strong need to support MFIs to develop products and / or services for financing agriculture.

Implementation of tailor-made trainings

Considering these elements, ADA's Technical Support Unit for MFIs wanted to integrate a technical support offer in agricultural finance, by integrating a coaching component to encourage stronger involvement of the MFI's management and ownership of the project.

In addition, training in agricultural finance based on content created by FAO (and co-facilitated in 2015 by FAO and ADA in French-speaking Africa) was very positively received. At the global level, the microfinance sector is showing recognition of the potential of the agricultural financial market.

In 2017, initial training was held with about twenty participants, most of whom applied for the coaching project: 5 MFIs and 5 coaches were selected and paired during the planning workshop.

In the last half of 2017, the coaching project in agricultural finance in Africa started!

Among the 15 MFIs that participated in the agricultural finance training workshop held in August 2017 in Abidjan, 5 were selected for the coaching support project for the 13 MFIs that applied.

These five MFIs are spread across four French-speaking African countries: Benin, Burkina Faso, Togo and the Democratic Republic of Congo.

The Directors General of these 4 institutions, accompanied by their colleague directly in charge of the implementation of the project, participated at the end of September 2017 in a planning workshop aiming to present the concept and methodology of coaching this project and to work with their "coach" dedicated to propose a first version of operational action plans.

The coaches are experts in agricultural finance in the sub-region, selected and sensitised to the coaching approach by a professional coach, who accompanied them during the planning workshop and also provides them with remote support.

The action plans of these institutions were definitively approved in November-December 2017 by the ADA and FAO teams in charge of the project and the first activities started in the last quarter of 2017 in the institutions.

The year 2018 will allow these 5 partners to implement the activities of these plans with enthusiasm and success, with the support of their "coach" and the technical support of ADA-FAO. Together we will build on this first year of the project so that we can adapt it as needed, and then integrate new partner institutions.